Domestic road transportation: Outlook negative
Sector expected to contract by 18-20% in FY2021 due to pandemic-induced challenges. August 2020
According to Shubham Jain, Vice-President and Group Head, Corporate Ratings, ICRA, “So far, contracts for five station redevelopment projects have been awarded by the Indian Railway Stations Development Corporation (IRSDC) and NBCC India, namely Habibganj (Bhopal), Gandhinagar (Gujarat), Gomti Nagar (Lucknow), Charbagh (Lucknow) and Puducherry. While Habibganj has been awarded under the PPP mode, the other four stations have been awarded on EPC mode. The first two stations awarded—Habibganj and Gandhinagar—are in advanced stages of implementation, while the remaining three (two in Lucknow and one in Puducherry) have been awarded in FY2019. The awarded contract values have varied between Rs 1 billion and Rs 5.4 billion, and have been taken up by construction players focused on the building segment. The total value of the four contracts (excluding the PPP project) is Rs 11.49 billion. However, the competitive intensity in bidding for these projects has been low, with average awards at 5 per cent premium to the base cost.”
Besides, ICRA notes that IRSDC has recently allocated planning and feasibility work for 39 stations to five CPSEs (NPCC, engineering projects, MECON, RITES, bridges and roof companies). This is likely to pave the way for fast-tracking development. This apart, NBCC was earlier entrusted with 10 railway stations, of which it has already awarded EPC work for three and is likely to take up the remaining stations depending on their financial viability.
Indeed, after a slow start, the station development programme has gained traction in the past year and is expected to gather momentum with multiple station redevelopment projects in the pipeline. Nevertheless, challenges still remain that can affect the programme.